Giardia lamblia is the most common disease-causing parasite in the United States and is responsible for massive epidemics of intestinal illness due to contamination of water supplies. To survive outside the host, the dividing trophozoites encyst. Since Giardia is considered the most primitive eukaryote, encystation is likely the earliest developmental process that eukaryotes undergo. Although encystment can be induced in vitro, the exact stimulus(I) is unknown, and current methods appear nonphysiologic because they require days of preincubation and use of supernormal concentrations of bile salts. In the present studies, we show that Giardia deprived of lipids undergo encystation rapidly. Studies indicated that lack of cholesterol alone and no other lipid could induce encystation. Bile salts in concentrations which created micelles greatly enhanced the uptake of cholesterol by Giardia while higher concentrations inhibited uptake explaining why high concentrations of bile salts initiate encystment in some Giardia isolates by lowering the effective cholesterol concentration in medium. In vivo, encystment is likely induced after absorption of lipids and bile salts in the lower small intestine. Previous studies showed that the surface variant specific proteins (VSP) of Giardia which undergo antigenic variation contain metal binding domains including Zn fingers. Compounds known to inhibit virus replication of HIV-1 by destruction of the Zn finger nucleocapsid protein were tested for similar effects in Giardia. A number of compounds were found to kill Giardia in submicromolar concentrations. Effects were seen within 2 hrs and were inhibited by high cysteine concentrations. The effect of these compounds in vivo is unknown. VSPH7, a variant specific surface antigen, was transfected in COS cells and expressed as native protein on the surface. The protein traveled from the ER to the Golgi apparatus to the surface, similar to other proteins. In contrast, the native protein travels to the surface of Giardia without the benefit of a morphologically definable Golgi apparatus.